Monday, September 03, 2007

Law Society accused of clinging to the past as member firms progress on legal market reforms

Trouble brewing again over at Drumsheugh Gardens, where the Law Society, desperate to maintain it's control over the Scottish legal profession, still won't face the fact that Clementi style reforms will eventually be implemented in Scotland

Refusing to openly debate the issue wont do much good either ... but facing up to the issues might .. although it may well be left to the membership to vote on that ...

Magnus Swanson, chief executive of the Big Four law firm Maclay Murray & Spens, has weighed into the debate on deregulation of the legal profession. He says there is little point in the profession continuing to prevaricate on whether to introduce alternative business structures, as he believes they are already a fait accompli.

He told The Herald: "The horse has already bolted on alternative business structures - and this is pretty much what I'll be telling the conference."

He was referring to the Law Society's conference, "The public interest - delivering Scottish legal services", to be held in the National Gallery of Scotland on September 28.

Alternative business structures are alternatives to the traditional structures for law firms - whereby partners who are practising solicitors within a firm must own the equity and share the profits between them.

Alternative business structures are due to become possible from 2010 in England and Wales, where they are being ushered in by the Legal Services Bill, currently passing through both houses of parliament. This follows Sir David Clementi's 2004 review of the legal services market.

The reforms are expected to help large law firms to raise money to fund their expansion or reward non-legal staff with equity stakes in their firms. They are expected to enable partners in large firms to make sizeable fortunes by selling out to, for example, investment banks and will also permit household names such as Tesco, Halifax and Norwich Union to compete with traditional solicitors' firms by offering basic legal services such as conveyancing and will-writing.

However, alternative business structures may not see the light of day in Scotland partly because the lawyers' self-regulatory body, the Law Society of Scotland, is unsure about how they might be regulated. Another of its fears is that smaller law firms across Scotland will be effectively wiped out when organisations such as Tesco start offering legal services.

Swanson said the Law Society of Scotland's conference on alternative business structures should not bother to examine whether they are good thing or when they should be introduced in Scotland, but instead focus exclusively on "how we establish practical regulation to cope with alternative business structures". This looks un- likely to be the case. Despite a recent warning from Justice Secretary Kenny MacAskill that the Scottish Executive wants the society to deliver "concrete proposals" at this event, the society continues to bill the gathering as a talking shop on the merits of alternative business structures.

In the August issue of its Journal, the Law Society of Scotland billed the conference as a "discussion forum", offering its members the chance to air their views in wide-ranging debate on alternative business structures, including whether these should be introduced at all. Rather than suggest it will present concrete proposals at the event, the Law Society referred to having proposals at a "white paper" stage by December 31.

Douglas Mill, chief executive of the Law Society of Scotland, concedes he does not expect conference to reach any consensus.

He said: "We wouldn't expect unanimity of view either within council or in the wider profession. High street firms will have a different perspective to big firms."

Michael Clancy, the Law Society's director of law reform, said: "The conference is the key in formulating ideas It's an opportunity to have an educated level of debate, with representations from stakeholders, and to let different voices within the profession be heard."

However, Swanson believes it would be wrong for Scottish-based law firms to be penalised through any failure to introduce alternative business structures. He said it would be "real shame" if firms that struggled to transform themselves into UK players in the past two decades - including Dundas & Wilson, Maclay Murray, McGrigors and Shepherd & Wedderburn - were forced to become English domiciled because of any intransigence from the executive and the Law Society.

Roddy Bruce, a partner at the leading corporate law firm Dickson Minto, which has offices in Edinburgh and London, said: "If (Clementi reforms) happen in England and give an advantage to English firms, then we would have to have the same treatment here."

Alan Campbell, managing partner of Dundas & Wilson, has also said it would be a wasted opportunity for the Law Society to launch another "talking shop" on alternative business structures.

He recently said: "The Office of Fair Trading (in its response to Which?'s super-complaint) has effectively said to both the executive and the Law Society that they must up their game. However, they don't really appear to have got the message yet."